germany opening an investigation. emergencies to political, european leaders are meeting to tackle the migrant isis. crisis.your -- migrant severe stress on russia, we look at how the country is turning a path out of recession at the ceo of one of russia's biggest banks. ♪ fugood morning, i'm scarlet we will get a look at the market check. stocks in the rent. by can see large declines 190 points in the dow jones, s&p losing 1.1%. extending weakness. the s&p 500 yesterday gaining almost nine points but today it is getting back all of that advance and more.

if you look at treasuries, risk off equities, prices are rising so that is raining down the yield. the yield on the 10 year, 2.5%. there is confusion about what the federal reserve does next after it declined to raise interest rates there is no significant thing on the calendar today so that is adding to the kentucky -- confusion. we had a stronger dollar yesterday. right now you are looking at the dollar lose ground versus the yen but it is gaining against the euro. that goldman sachs note, the euro losing $.10 because of easing from the ecb. commodities, let's check on oil prices. down by 2.3%, hovering at that and gold, rent at 48 prices coming down by almost 1% at $10.

that is your market check, we want to check the top headlines as well. goldman sachs is ceo lloyd blank ane -- lloyd blankfein has warm of them phone a and he says it is -- lim on a ' is 61 years old and has been ceo since 2000 x. -- 2006. his trip to cuba by visiting the shrine of the patrons think. -- patron sain. he wants to overcome ideological misperceptions and establish change. u.s. diplomatic relations improved this year after pope francis helped broker. china's president is starting his visit today, in advance, xi jinping told the washington journal his country will change and evolve despite the slowdown. his visit concludes friday with a state inner at the white house

during the obama administration is at odds with china over cyber spying tactics as well as human rights. a government audit reveals an interesting detail about the troubled startup of the federal health care website. the main contractor was paid $4 million to fix its own mistakes. the contract allowed the country -- company to pass on to taxpayers and tack on a profit. scott walker is urgent republican presidential candidates to unite against a common foe, donald trump. the wisconsin governor is dropping out of the race and said other candidates should insert are doing the same grade welker said voter -- walker said they should back a conservative alternative to the front runner. gov. walker: i believe i am being called to leave a leading the field in this race with a positive conservative message so it can rise to the top of the field.

i will suspend my campaign immediately. scarlett: walker once let the public -- polls in iowa but he was struggling to raise money. in thes a new twist government investigation of collusion by airlines. bloomberg news reports that antitrust officials want to know airline communications with shareholders. they argued passengers paid more when the same investors hold shares in the biggest airlines. those are your top stories. coming up in the next hour, just a sneak review. the eu has call a emergency summit in brussels. but angela merkel and other leaders are thinking and possibly doing. wall street banks may have found a way to pinpoint the value of analysts and squeeze more money from their research. oil prices plunge again. how the crude oil selloff has taken a toll on russia's economy. those stories and more coming up.

we want to get back to our top stories. breaking news over the past hour involving the emissions of scandal surrounding volkswagen. shares of vw in europe have plummeted in europe. you're looking at the depository receipts. with 21g yesterday times the daily average. reporting the scandal low-cost volkswagen ceo his job, citing unidentified members of the company's supervisory board who say that he will be replaced on friday. we are joined by matt miller as well as the berlin bureau. we want to -- before we get to this, germany has opened up an investigation into volkswagen. it was the latest. the transport minister came out today and said the german government and general in berlin has been concerned about the implications of volkswagens manipulation of diesel engines

to improve emissions. theas not had an effect on -- in germany, the auto industry is massive. it is responsible for one in seven jobs. the government is taking a hard-line and wants to clear this up completely. scarlett: they are jumping on this now. matt miller, you were here with us and attended a vw that last night. ironically it was aimed at marketing the redesigned sought. -- passat. matt: they will keep the diesel variant of that aside -- passat. i went to this party in brooklyn where they had lenny kravitz playing to introduce the redesigned model. had michael horn speaking about it. the first volkswagen executive to publicly address this to a crowd. probably the only one for a

little while. cars tost fix the prevent this from happening again and we have to make things right. with the government, the public, our customers, our employees, and our dealers. matt: dealers is a huge part. they have a whole bunch of inventory still sitting on their lots of they cannot get rid of. and angry customers coming back and saying i don't want you to fix my car because if you just catch the software i will have higher fuel consumption to it will probably produce soot. and it don't have as much power because the emissions fix will limit the amount of pickup your car is capable of. i think they will probably have it is something like by the cars back. it will be a very costly thing. i asked carlos this morning who

was unveiling a new car of his own, the nissan altima, what he thought. stocks across the board have gotten crushed. are putting a communique reminding people about improvement over the last two years but in order to have better emissions and efficiency. but this has to be for every single member to make their own statement about what they are practicing and what kind of devices they have. this is an issue for every car manufacturer. but we want to reinforce the trust existing between one side and the consumer. matt: he is the head of not only nissan but the european manufacturers association so he is a leader in the industry and

it is important that they listen to what he has to say. scarlett: his voice rings loudly. i want to get back to the german report that the ceo will be replaced on friday. his contract was supposed to get extended but it looks like he might be relieved of his duties. tell us what this means for germany. you mentioned one out of every seven jobs is linked to the auto industry. the auto industry in germany as massively important. you have three major manufacturers. it is incredibly important. matt lived in germany and knows how important cars are to the german psyche. it is german engineering at its finest. with volkswagen taking a hit like that, it is the biggest company, automaker in germany and outsold toyota in the first half. with them taking this hit, it is

difficult for germany. angela why even merkel is out saying we have to fix this. matt: she owns a piece of this company. lower saxony as well as the federal government owns massive portions of volkswagen. the have representatives on supervisory board, labor has are presented is on the board. i'm not sure americans understand how much this company is controlled by the government and unions that build the cars. they all have a piece of this and maybe that's part of the problem. chris: lower saxony owns 20%, that is volkswagens home state. they have two members on the supervisory board. , it iser shareholders basically a family controlled company. it has a weird power struggle. the power frame are going on --

framework going on with the unions and the porsche family. it is not a traditional company that will cave in to investor pressure or public rusher. -- pressure. what goes on with the family, government, unions, that's why it's important and not a straightforward situation about whether vinterkorn can survive this. scarlett: he is also legendary for his attention to detail. do we presume he is at the root of this, not wrote engineers -- rogue engineers? matt: i would not presume that. this is something that will get picked over by lawyers and judges. i would not waste blame now -- place blame now. an analyst at bernstein was writing in a note that at one point, porsche or audi had

lost a race. and vinterkorn took out the gearbox and took it apart to see what the problem was. this isn't the u.s. ceo with a big smile or a french ceo who went to one of the elite schools there. this is a german engineer who knows how things work and he should have known how they were able to lower the emissions and pass california emissions. scarlett: matt miller, thank you so much. and thank you to chris reiter from our berlin bureau. -- coming up on the bloomberg market day, as thousands of migrants make their way to europe, the eu calls an emergency summit in brussels. we will check in with hans nichols next. ♪

♪ scarlett: we have breaking news on bank of america. moynihan has won the shareholder vote and can remain chairman of the board. the vote results are preliminary and were announced at a special meeting. it was upheld with 53% shareholder support. inwill have more details charlotte, north carolina but for now, ryan moynahan -- brian moynahan has one and can remain ceo. we were remain tuned. let's look to the markets, so much of that strong start to the week. the s&p 500 gained but it looks like we're getting it back and more. senior market correspondent

julie joins me. julie: it looks like we have a perfect storm of various group driven news. you see averages are down more than 1%. what are these industries? look at the map on my terminal. you have various actors down. broad-based selloff but materials are taking the biggest hit, technology, industrials, discretionary, financials. those are the top or bottom groups. let's look at materials. and look at mosaic. that is the producer of potash fertilizer. it will reduce output and we don't normally see a pullback in commodities. we usually see them in crop prices as well. that means the demand for fertilizer and potash has been waning. outputic is cutting its

and taking a hit of 7%. we also speak of other commodities seeing a pullback. metal producers as well. taking another leg lower, newmont, alcoa, you are talking about volkswagen and what happened about its deception over emissions. we are seeing a ripple effect throughout the industry. automakers are trading lower even though it seems to be the w -- vw specific. others are trading lower, particularly fiat and auto parts suppliers, those that have high exposure to vw are doing poorly. many stocks were not doing this poorly yesterday like harmon. it was actually higher even though it has high exposure revenue wise to vw. tovw's own stock continues

decline and accelerate its decline it is spreading even more to some suppliers. scarlett: they do so much, we will check with you later on. it is losses for the u.s. stock market. bitterly divided european leaders are holding a emergency summit to find a solution to the worst migration crisis since world war ii. angela merkel has called on her peers to accept joint responsibility. hundreds of thousands of migrants are expected to enter the continent by the end of the year. let's bring in hans nichols in berlin. as we look to this summit later on today in brussels, talk about the economic cost so far of the crisis. there is a humanitarian and economic cost. hans: on the economic side, what germany has pledged to do is spend 6 billion for 2016. nobody has figured out the numbers for 2015 in part is no

one knows how many refugees will apply for asylum. we have new numbers from the oecd. they just put a big report out. they tell us where a lot of refugees, and some economic migrants are coming from. coming hungary, some are from syria, 28% from afghanistan. almost 20% are coming from kosovo, a balkan country. angela merkel would like to see economic migrants sent back faster so she can focus on a redistribution plan. we spoke with the secretary-general of the oecd and there seems to be a lot more negotiating between leaders in brussels before they come up with an agreement. >> be on the issues of resettlement and quarters which are being discussed today and --orrow, it is important

receiving countries are and will challengeshort-term to integrate refugees. hans: yesterday we had the ambassadors meet in brussels, will be a meeting of interior minister's and we will see how far they get. to have any sort of unity on this, you have to have the heads of state come together. they meet in brussels on wednesday night and the following day in berlin, angela merkel is hosting her own summit on how to integrate them into society, provide housing, figure out employment. what we need is an agreement. and a reconciling of all the numbers. nobody has a good handle on them. scarlett: give us some perspective on angela merkel. in thethe key figure public perception has been all over the place. she was down on greece, up on the refugee crisis. the refugees scandal is going up in germany now. what might this have on her

ability to round up everyone in dealing with this crisis? hans: in terms of forcing eastern european countries to accept any sort of redistribution plan, as she controls enough votes for a qualified majority at the eu, they can push this through with 55% and punish states that don't accept their part of quotas by withholding funds. that is a drastic measure. scarlett: thank you so much, bloomberg's correspondent, hans nichols joining us in berlin. we have more coming up, asking how much analyst research is worth. banks have found a way to figure that out and it is looking to cost customers. ♪

♪ scarlet: some of wall street's biggest banks may be changing the way they do business after years of giving away analyst research for free. they want to stop making it easy to share. what does this mean for banks and you?

joining me as dakin campbell. put into context just how much banks and brokers spend on analysts. how it is currently funded as well. dakin: we had numbers in the story that say and 2008, banks spentrkers -- brokers $8.2 billion. that is mainly for compensation pay, travel. it does not include technology. to what onee down consulting projects to be 3.4 billion in 2017 and has come down by more than half. what banks are trying to do is figure out a new business model for the research product. there are discussions in europe about making the commission-based model which is how it has been done for a long time galway -- go away.

thanks would have to charge investors for their research product session banks would have to charge for the research product. scarlet: what they have to make it less accessible or charge more? selling.ey would be they will be going to an investor and incident saying give us trading commissions for research we are getting you for free, they would say here is a ,eport from an analyst you like be $25,000. you'd be more codified, clear-cut between what investors pay for research. scarlet: what is the upside for customers? but they get better quality research? dakin: they may, they may be able to say to research providers, whose reports they don't read, we don't want to pay for it at all. then you have the analysts, something like a 15 rank stock,

he has been blasting research, now nobody wants it. he may go away or change his or her approach to what sort of research they are providing. scarlet: the market will decide. thank you. bank of america. dakin: citigroup and morgan stanley. scarlet: you can read his story on bloomberg.com. still to come, vladimir putin is holding a meeting to try and figure out how to bring his country out of its first recession since 2009. we'll hear from the head of one of russia's leading banks. that is coming up. ♪

♪ scarlet: welcome back. i'm scarlet fu. where an hour into the start of trading and a check on the stock market, the intraday chart of

the s&p dow and nasdaq. you have 11 stocks lower or everyone that is higher. that would make it the broadest retreat since september 1. if you look at it over a three day period you can see the decline this morning when trading opened. there is that leg lower on the opened for trading today. groups, youindustry have all 10 groups in the s&p 500 inclining, led by the materials group. energy only down 1%, the second-best performer but we are talking about the kleins. -- declines. in u.s. stocks on volume at least in the dow, low average. 11% low average versus the 10 day norm. let's get to headlines. one american company that may be pleased about the chinese president's first visit. xi jinping's first stop is

seattle. boeing may get a major order from china. china's government signed off on all purchases by its airlines. a cyber attack is being threatened against britain, according to a organization that monitors militants. a drone was used to kill a islamic state writer was a british citizen. keeping militaries from crashing in syria. vladimir putin and benjamin netanyahu reached an agreement. russia said it would consider sending combat troops into syria and israel has troops on the border to syria. we stay with russia because the sliding crude oil has taken a massive toll on the economy. it is in its first recession since 2009 3 vladimir putin is pulling a meeting with lawmakers.

among the country's options are higher oriole taxes -- oil taxes. kostin, ceos andrey of cvb bank. thank you so much for joining us. you have in making the case that even with pressure from sanctions, russia's economy has managed to avoid the worst case scenarios. what is the key to returning russia to sustainable long-term growth, or is the economy held hostage to external factors like sanctions? andrey: we can compare the with seven years ago when we had a global financial crisis. things were worse for us at the time. i have to admit this year we might have a negative the growth of around 3.338%. we hope that next year we will

start to grow slowly by .5%. the main negative factors in the lower oil price, the slowdown of the asian economies, particularly china. we set prices for most of the russian export commodities and restrictions called sanctions, which were imposed against russia's companies and leading banks. sign -- the positive sign is the russian economy has somehow adjusted to these negative factors and can cope. for example, agriculture will grow by more than 3% as a result of the restrictions on import. scarlet: sit tight for a moment because we have breaking news on one of our top stories on volkswagen. we will get back to you but i want to check in with hans nichols in berlin. winterkorn making comments. hans: martin winterkorn appears

not to be resigning. he made a video statement that we are still listening to and playing but he is indicating he is ready for a fight and asking for trust. he says he doesn't know all the technical answers and doesn't have answers to all questions. he says they are looking to find a technical solution. to recap, volkswagen issued a profit warning and they set aside 6.5 billion bureaus -- euros. the environmental protection agency says there has been cheating by volkswagen on diesel admissions -- emmisions. a german publication citing people familiar with the supervisory board that winterkorn would be replaced on friday and replaced by the porsche ceo. we have not been able to confirm that and what we are hearing

winterkorn isn that he appears to want to stay and fight although he said in a comment everything is on the table. there is a supervisory board meeting wednesday night and another on friday. we will listen to his full statement after back to you. scarlet: it looks like he is working closely with regulators. the format in which he is speaking to the public is interesting. this is a video statement. there is no interaction with anyone is there? hans: dr. winterkorn is a buy the books, detail guy. the idea that he would want to have the most control is not surprising. this is a guy that fixes gearboxes if a car is going wrong. he is a german engineer, a detail oriented man. the issue is how could he not have known that books like an -- wagon wase an -- volks

cheating the environmental protection agency. the number of regulators that he is going to deal with its piling up. it looks like the transportation ministry will be holding an investigation and there will be one in korea. we heard about france testing all diesel vehicles. the list of regulators he will have to satisfy will grow. by their own admission and profit warning, they said 11 million vehicles have this technology. this is a company that produces about 10 million vehicles per year. scarlet: the numbers are certainly eye-opening. thank you so much for recapping those headlines and we will monitor the comments of the ceo martin winterkorn. he is asking for trust and that he is working intensively on a

technical solution. we will check with hans and matt miller at the top of the next hour. we want to get back to our guest, andrey kostin, the ceo of cvb bank. thank you for being patient with us. we had to break away with the news on vw. talking about russia's relationship with china, vladimir putin has pursued as a ties with china and asia. the cost seems to be more risk from china's economic slowdown. what is your view on the thinking that the next global recession will be made in china? if that is the case, what is the impact on russia? andrey: we are looking for developing relations with china not to replace throughout or western countries, but we thought until now we were in there wered opportunities to work more with

asia and china in particular. china setoned before, the prices for most russian commodities in export. and it slowed and economic in china, a slowdown in economic growth in china might affect russia but because of our international exports. generally i think the key issue for russia is dependence on oil prices and other commodity prices. that's the target we set but it is easier to fulfill because of investment to these. the relationship with china will partially because of the political situation but mainly because we have seen benefits from working with china as one of the leading economies. scarlet: i want you to put on your ceo hat.

is there still a dollar quiddity crunch along russian comedies -- liquidity crunch along russian companies? andrey: we are using our dependence on international borrowing partially because of sanctions. if last year, russian companies billion, owe $700 now it is 550 billion. it would affect our ability to go to the international capital market and raise new capital. that is unfortunate. the problem of privatization. we very much believe sooner or later we will be able to come back to the international markets to get new capital and development. scarlet: deutsche bank announced it is closing its russia's security unit. you see other western banks pulling out of russia and following that? andrey: it is more because of

the scandal. they handled money laundering and this case which was open and the united states. i think that is the main reason they are doing at rather than economic reasons. scarlet: you see it as a deutsche bank specific issue. andrey: i think many foreign banks already do that but american banks like citibank is doing well in russia and having the business here. scarlet: thank you so much. ceo of the cvb bank joining us from london. we looking you up-to-date on those headlines and get you a check on global markets, particularly today's big slide in equities. coming up on ♪ ♪

♪ scarlet: welcome back. we want to get you caught up on market action around the world. asia, where japan's nikkei to 25 fell almost 225. -- added almostcomp 1% or 29 points. one story out of the region is chinese president xi jinping's first visit to the united states with a stop in seattle. we have more from hong kong. >> no surprise xi jinping picked seattle as his first stop. his three predecessors all visited the city as chinese president. the unofficial view is that he will get a warmer, more informal welcome in tech and business ridley seattle than in the more politicized atmosphere of the nation's capital. they want to portray back home

and in the u.s. a leader willing and able to work with america. more contentious issues like the trade deficit, hacking allegations, human rights, climate change, and china's military ambitions in the south china sea will likely be taken up later in washington. he intends to soften those blows by emphasizing business cooperation, perhaps with airplane orders from boeing and meetings with bill gates and tim cook. scarlet: let's go to new york where mark barton is sitting by. mark: the biggest concern is u.s. interest rate persistent fear index. europe's fear index has risen 17%. that is the most since august. you're never what happened, the biggest -- you remember what happened, the biggest slump in seven years.

19%,wagen is down by falling over 30% in two days. are you feeling brave? bernstein says shares offered stock slumpthe looks overdone, the worst-case scenario is already priced in. mine is also slumping today following base metals. the mining index slumping to its lowest level in six years after the asian development bank cut its forecast on chinese growth for the second time in three months. i want to look at sterling against the dollar, down for the third day. a government report showed a drop in tax receipts and the business lobby in the u k said factory exports were a weak link. the euro is dropping once again, down to a two-week low. auctions traders suggested the most bearish in two months

against the dollar. they expected the ecb to pump more money into the economy to meet the inflation target. more in the offing if options traders are to be believed. it is a safe haven, we have yields falling and greece. the u.k., france, and germany. data, the manufacturing the gauge should show a slowdown in growth. that is also boosting the bond market because that could also mean more qe. sharptjulie: we're seeing a selloff in the united states. automakers are following. that on the minors and all three averages have been accelerating in terms of the line of the opening bell. look at my terminal in the volume of each group. most of the groups are down,

notably materials seeing an uptick of 19%. not only do you have a lot of declines, you have it on heavy volume which is not a good sign. we're talking about copper, as well as gold. falling,have glencore traitor minoer and a that is below its ipo price. tradinging some similar , we have been seeing this pullback in commodities that is continuing newmont mining. that is part of the materials group as well. look at what is going on in the u.s. bond market. we are actually seeing a decrease in bonds. that has to do in part with the outlook for inflation. yes the federal reserve officials were out in force setting it is still fairly

likely we will see an increase by the end of the year but one of the things constraining the fed is the fact that in asian is not taking up -- picki -- inflation is not picking up. yields the one year versus treasury inflation protected securities and we are seeing this big decline at the end of your screen. points, thecentage lowest since 2009. this affects inflation expectations in the market. they are very low. people trying to extrapolate what that means. scarlet: where does that inflation go. thank you for putting that in perspective for us. more is coming up. in the bondo invest market? ♪

♪ today, we willon be airing live from fenway park in boston. they will be speaking with the red sox president and ceo larry lucchino. that is on with all due respect them in my part. welcome back. let's get you the top stories. general mills reporting better-than-expected results for its quarter. 24%.-quarter profit jumped retail volumes and sales both growing. the company is maintaining its outlook for the year. ashland, the chemical company plans to split into. the new one will focus on specialty chemicals while the other one will be called valvoline which focuses on auto maintenance. probably has 1200 oil change

locations. apple is trying to build a car but the western is what kind. the company is -- the question is what kind. the times says apple has hundreds of people working on that project. those are your top stories. we are moving to markets is municipal bond trust in the u.s. are set to take off despite the tricking municipal market -- shrinking the missable market. illinois handing investors the worst returns. is it safe to be an investor? blackrock's head of beautiful bonds -- head of municipal bonds peter hayes joins me along with kate smith. kate and her colleagues have written about how the interest rates would be beneficial to bonds overall. we are not there yet.

at the same time, you are seeing a push by some municipalities to raise money while they can. tell us what this state of demand is. >> it has been a bit mixed, i would say it started out strong but it has weakened. i think it is partially low interest rates in general. it is the low level of rates, the lack of interest. oflso think it is the fear rising rates, people on the sidelines with cash. short duration bonds, waiting for the time for a screwup when rates were higher, 10 year treasuries at four percent or 5%. i think that added to the we could di -- weaker demand. i think it's more about interest rates. scarlet: when you talk to investors, what is the picture they are painting for you? kate: this year will likely be a record breaking year for issuance. bank of america, merrill lynch projected at $425 billion which

is record-breaking. you're seeing even though demand my below are mixed, -- may be low or mixed, a lot of industry financing is taking out some of that expensive that from the 90's, replacing it with cheaper debt from today. you are seeing a lot of supply on the market. whatet: put into context is happening and puerto rico and how that investors perceptions. there were discussions on the electric power authority not getting an extension from bondholders. does this cast a pall over the community bond market? peter: you think it would, their -- $70 billion. i don't beget has cast a pall over the general market. this has been a slowly evolving story. i think a lot of investors sold the risk and that risk transfer

different types of investors. i think we have seen that big risk transfer and as a result, the headlines are not rattling the typical foundation of the muni market. it has a long way to go so we will see what that does. scarlet: you had forecast an average 40% haircut for puerto rican bondholders. peter: they have to get out from under this pet. a lot of reforms they have put forth our great and good starting point. all those are not going to work. we still think that on average, 40% or 45% is the right number. scarlet: what about the deficit, the working group came out with the-and city had working billion dollar deficit. later in the week, morgan stanley comes out and says it is

only 56. -- 5.6. ter: it coincides with the crew report which came out a couple months ago as well. i think there is more justification for those numbers. when you look at the economy of puerto rico, a lot of reforms need to take place. it is unlikely that debt will be higher rather than smaller. scarlet: thank you for joining us. peter hayes's black rocks head of municipal bonds. covers munith bonds. the have more coming up in the next half hour and we will go over the statement from volkswagen ceo martin winter war and who it -- martin winterkorn. ♪ >> bloomberg television's brought to you by at&t, your small business experts are here.

scarlet: it's for the p.m. in london. >> welcome to the "bloomberg market day."

volkswagen has a government investigation in germany. we get you caught up on all the headlines. ,> bank of america shareholders a report from south carolina. >> and other momentous meeting as xi jinping arrives for visit. one hot topics will be on the table? how will they resolve their differences? scarlet: good morning, i am scarlet fu. betty: i'm betty liu. 90 minutes away into the trading day. let's begin with a look at how markets are this moment. stocks are on the decline, the dow is very near the bottom of the session, off by 266 points. driving down the indexes somewhat. the automakers, le